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As of January 1, 2011, millions of baby boomers began to retire;
the number is increasing by roughly 10,000 people a day. Many are
depending on money that may not be there and many lost most of
the value of their home and much of their 401k during a slew of
recent financial crises. The reality of the retirement problems,
and the skyrocketing healthcare costs, cause many to wonder if
this may be the next great financial crisis.

However, though the present situation is sobering, younger
generations can learn some invaluable lessons about saving for
retirement, personal investing and financial planning; something
that should start early even despite student loans and how
daunting the task is.

Understanding the Early Years of a Retirement Saving
Plans

Though most young people are familiar with the idea that
retirement costs are already high and continue to increase, far
fewer have a precise measure of how quickly. This is something
that is extremely important to keep in mind, even for those just
out of college as many costs of healthcare, particularly
retirement, are increasing quickly and relentlessly.

Between 2011 and 2012, healthcare costs increased by 6%, and
considering the increasing rate of chronic illness, this trend is
likely to continue. Tangibly translated, if a 65-year-old couple
retires, they are looking at more than $250,000 in healthcare
costs if one person lives 20 years and the other 17.

Another alarming characteristic of those still in their early
adult years and middle age is that almost 16% do not have a basic
understand of their yearly expenses. B=cause of this many do not
have long-range financial plans in mind and will delay planning
for retirement until they are nearing 60 and have just five years
to save.

However, as technology further integrates into the average
person’s life, comprehensive financial planning apps make it much
easier to link a budget app on a computer or smartphone
directly to a bank account and debit card.

An Example Retirement Savings Plan: the First 20 Years

Age 25: In spite of student loans, young people should begin
aggressively saving.

Age 31: By this time financial planners recommend having one year
of annual spending put away into a retirement account. This
includes all of the year’s expenses from rent to leisure. This is
the most important part of the savings plan, because this money
has so long to mature it can fund the last 17 years of retirement
(83-100)

Age 35: By this time retirement savings accounts should have
grown to 2 years of annual spending saved; however, saving will
become more difficult as families grow and become more expensive.

Age 41: At this point, in order to retire comfortably, people
should have saved 4 times their annual spending. Noticeably, the
time to save a year of spending has been reduced by 50% which
means most people will have to reduce spending.

Age 45: As retirement nears, financial planners recommend people
have saved 6 times their annual spending saved by this age in
order to comfortably retire at age 67.

Additional Age Based Benefits as Retirement
Approaches

Though the benefits of aging are often thought of as rites of
passage for younger kids, as people near retirement they become
eligible for a litany of other benefits they may be crucial in
ensuring a comfortable retirement.

At age 49, workers can begin contributing $16,500 to 401k, a good
idea considering maxing out what employers match reduces the
personal burden of retirement saving. The money matched also
frees up funds for investing in other areas. For those who did
not save enough early on, catch up contributions are allowed at
age 50. These additional contributions can be vital in an era of
students loans as early savings will likely be depressed or
sporadic.

At age 62, it is possible to begin claiming social security
benefits at this time, although benefits will be 65-75% of normal
if you begin claiming at this age. At age 65, Medicare
eligibility begins. It is important to register early as there is
a six month window surrounding 65th birthday, 3 months prior to
the day and 3 months after, is the only point at which people can
register penalty free. Every year people wait adds 10% to their
premium. Finally, at age 67, full social security benefits become
available to those born in 1960 and beyond

"Saving for retirement seems like a task that only the very
wealthy are able to complete; however, in reality, it is possible
for anyone that plans ahead and takes a vest interest in personal
investing and finance." says Daniel Guidotti of PFHub.